THE underlying rate of inflation reached its highest level for more than two years last month as food and petrol prices soared, official figures have shown.
The Office for National Statistics (ONS) said the underlying rate of inflation, which excludes mortgage interest payments rose by 0.4 per cent in May to 2.4 per cent - its highest level since April 1999, and significantly above City forecasts.
Food prices surged, with big increases in the cost of seasonal foods brought on by wet weather and poor growing conditions.
Food prices in May were 2.4 per cent higher than the previous month, the highest monthly increase for 19 years. The cost of fresh vegetables was 41 per cent higher than 12 months ago.
Motoring costs also increased as higher crude oil prices forced up the cost of petrol at the pump.
The Bank of England uses the underlying rate of inflation when setting interest rates, and the unexpectedly high rise probably rules out a further cut in the cost of borrowing next month. The bank's Monetary Policy Committee will be concerned that a further cut could push inflation above its 2.5 per cent target.
The headline rate of inflation. which includes mortgage interest payments, also rose, from 1.8 per cent to 2.1 per cent.
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